Vietnam Market Outlook | July 2022

Highest Q2 economic growth since 2011 sets the stage for strong second half of 2022

Key macro indicators

Macro Outlook

We believe that the recovery of industrial activities will be continued in both the short-term as production shifts from China due to prolonged lockdowns (Apple’s iPad has been reported to be shifting production to Vietnam for the first time due to continued supply chain difficulties in China) and long term as the China+1 movement continues to gather steam. We also expect retail sales to continue to elevate given suppression after 2 years of pandemic as well as international arrivals are expected to pick up in the second half of the year as tourists have had time to plan trips and COVID related travel procedures are becoming less cumbersome.

We upgrade our GDP growth projections for 2022 to range between 6.8% – 8.5% with supported by

1. Global food price crisis could be an opportunity for many Vietnamese agricultural products to further gain export’s market share globally, especially rice and aquatic products. 
2. The continuing recovery of all industrial activities after switching from zero-COVID-19 strategy to living-with COVID-19 strategy in major economic & industrial areas in conjunction with rising global demand which will push activities from the FDI sector in terms of investment and exports.
3. The strong recovery of service sectors, after relaxing all COVID-19 related restrictions on service businesses

We slightly revised our expectation of CPI for 2022 will increase in range of 3.5% – 4.1% (vs 3.5% – 4.0% at last month) and remain within Government’s target of 4%.  Among the risks we’re watching closely are increasing global commodities prices, especially on the food sectors, which have yet to result in major inflationary pressures in Vietnam as they have in many other countries.